Multiple companies have issued risk warnings, with 12 pharmaceutical stocks rising more than 20% in a week against the trend. Medical | Science and Technology | Risk

Introduction: Against the backdrop of anti-corruption in the pharmaceutical industry, the pharmaceutical stock market has gone through consolidation and strengthened against the trend.

Author | Ge Hui from First Financial

In the past week, the Shanghai Composite Index has fallen below the integer level of 3200 points, with a cumulative decline of 3.01%. However, in the context of anti-corruption efforts in the pharmaceutical industry, some pharmaceutical stocks have risen against the trend.

According to statistics from First Financial, out of the 506 companies in the Wind healthcare sector, 197 companies rose, 25 saw a limit up last week, 12 saw a rise of over 20%, and the highest was Keyuan Pharmaceutical, which saw a weekly increase of over 98%.

In terms of trading activity, the average weekly turnover rate of 25 companies exceeds 10%, among which Jin Kai Sheng Ke and Hong Kong Tong Medical, which have just landed on the ChiNext board, have both had an average weekly turnover rate of over 50%. But there are also companies that have fallen deeply, with five companies including Pinyin experiencing weekly declines of over 10%.

Due to no significant changes in business operations, multiple companies such as Keyuan Pharmaceutical, Celic Medical, and Sanofi Biotech have issued risk warnings.

25 stocks with an average weekly turnover rate exceeding 10%

According to previous reports from First Financial, the pharmaceutical sector's daily market value evaporated by over 200 billion yuan due to the overall impact of the anti-corruption storm. At the same time, the development prospects of pharmaceutical companies in A-shares have attracted the attention of investors. Investors have been intensively questioning listed companies on anti-corruption issues, and several companies such as Mindray Medical have responded urgently, stating that anti-corruption is beneficial to the long-term development of the industry.

After a phase of adjustment, pharmaceutical stocks rose against the trend in last week's market. In terms of increase, 25 companies have hit the limit up, with 12 companies increasing by more than 20%. Chemical raw material pharmaceutical company Keyuan Pharmaceutical rose more than 98% in a week, while Hong Kong Stock Connect Medical and Jinkai Shengke both rose more than 50%. Weight loss drug concept stocks such as Sanofi Biotech and SPD concept stocks such as Serenity Medical on the Four Board all rose more than 40%, while medical device stocks such as Wuzhou Medical and seven other companies rose more than 30%.

Not only did prices rise, but the turnover rate of several medical stocks last week also exceeded expectations. 25 pharmaceutical companies had an average weekly turnover rate of over 10%, while 3 companies had a turnover rate of over 50%. The highest performing pharmaceutical company, Keyuan Pharmaceutical, had an average weekly turnover rate of 49.93%.

Among them, Jinkai Shengke and Gangtong Medical recently listed on the ChiNext board on August 3 and July 25 of this year, respectively. The average weekly turnover rate of small molecule CDMO service provider Jinkai Shengke reached 61.01%, Hong Kong Tong Medical in the medical device field reached 54.77%, and the turnover rate of supply chain comprehensive service provider Guoke Hengtai in the medical device field was 54.43%.

Chemical raw material pharmaceutical company Keyuan Pharmaceutical's weekly increase of over 98% has attracted market attention. The company announced on the evening of August 11th that the trading turnover rate on that day was 54.71%, indicating a high turnover rate. Investors are advised to pay attention to the risk of speculation in the secondary market.

Multiple companies have issued risk warnings

Seli Medical, which is listed on the fourth consecutive board, saw a 42.59% increase last week. Based on the company's past announcements, it is actively strategically expanding its SPD hospital lean management business.

The naming of the company's SPD model comes from the three core tasks of supply, processing, and distribution in the hospital's drug and consumables circulation process. SPD business is a business model that uses "smart supply chain" as the core, builds a medical consumables smart supply chain management platform through informatization, intelligent construction, and optimization of operational processes, and helps medical institutions achieve refined operational management.

After experiencing abnormal stock fluctuations, the company has issued risk warnings multiple times.

In terms of company performance, in 2022, Seli Medical achieved a revenue of 2.3 billion yuan, a decrease of 11.19% compared to the same period in 2021, and achieved a net profit attributable to shareholders of the listed company of 15.4417 million yuan, an increase in the amount of losses compared to the same period in 2021. In the first quarter of 2023, the company achieved a revenue of 444 million yuan, a decrease of 23.29% compared to the same period last year; The net profit attributable to the shareholders of the listed company was -14.9078 million yuan, an increase in the amount of losses compared to the same period last year. The company's performance in the first quarter of 2022 and 2023 were both in a loss making state. In addition, due to changes in the company's business structure and policies such as centralized procurement, the overall comprehensive gross profit margin of Seli Medical's main business showed a slow downward trend from 2020 to 2022.

In terms of SPD business, Seli Medical stated that based on the current competitive situation in the SPD industry, as the industry gradually matures, more entrants will participate. The company has a large number of subsidiaries and a wide geographical distribution, which brings internal control and operational management risks. In addition, as each subsidiary of the company wins the bid for IVD or SPD projects, higher requirements will be placed on the company's organizational structure, management system, resource integration, service capabilities, and other aspects.

In addition, Celi Medical has also raised concerns about the risks of long accounts receivable periods and high balance levels. The continuous growth of accounts receivable will occupy a significant amount of the company's operating capital, leading to a decrease in the company's capital utilization rate and an increase in capital costs.

Sanofi Biotech, which focuses on the peptide pharmaceutical field, surged 47.41% last week. The company announced on the evening of August 11 that as of August 11, 2023, its latest rolling P/E ratio was 61.11 times; The average rolling P/E ratio of the pharmaceutical manufacturing industry in which the company operates in the past month was 23.47 times.

As the market is concerned about the treatment of diabetes and weight loss drugs Lilalutide and Smeaglutide, Sinobio also reminds that the company's generic drug projects of Lilalutide and Lilalutide injection are still in Phase I clinical stage in China, and Smeaglutide is currently in the pre clinical research stage, both in the R&D investment stage; The company's Liraglutide API was registered with DMF in the United States in October 2015, and currently there are no customers purchasing it for the production and sales of Liraglutide preparations; The foreign formulation customers of Smegglutide active pharmaceutical ingredient have not yet obtained production approval, and the sold active pharmaceutical ingredient is only used for formulation research and development. The sales and profits directly contributed by the above two varieties are relatively small.

On the evening of August 11th, Kaikai Industrial announced that the daily closing price deviation of the company's A-share stock for three consecutive trading days has exceeded 20%, and the actual fluctuation of the stock price after excluding the overall market and sector factors is relatively large. The current P/E ratio of the company is 69.36, significantly higher than the P/E ratio of 22.24 in the same industry. According to Wind data, Kaikai Industrial belongs to the pharmaceutical wholesale industry chain and is a listed company mainly engaged in clothing and medicine. The company mainly engages in the production, wholesale, and retail of shirts and sweaters, as well as the wholesale and retail of Chinese and Western patent medicines.